The Supreme Court has affirmed that homeowners must comply with the requirements of their homeowner’s association to remain beneficiaries of socialized housing programs. Failure to adhere to association by-laws, such as paying dues and attending meetings, can lead to expulsion and eviction. This ruling emphasizes the importance of fulfilling obligations to maintain membership and secure housing rights within community-based programs, protecting the integrity and sustainability of such initiatives.

Evicted Dreams: When Association Rules Override Prior Occupancy

In John C. Arroyo, et al. v. Rosal Homeowners Association, Inc., the Supreme Court addressed whether long-term occupants of land acquired under the Community Mortgage Program (CMP) could be evicted for failing to comply with the homeowner association’s requirements. The petitioners, who had occupied the land long before it was acquired by the Rosal Homeowners Association, Inc. (RHAI), refused to sign the Lease Purchase Agreement (LPA) and failed to pay membership dues or attend meetings, leading to their expulsion from the association and subsequent eviction order. The central legal question was whether RHAI properly enforced its rules and whether the petitioners’ rights to socialized housing were violated.

The factual backdrop reveals that RHAI was formed by occupants of a parcel of land in Bacolod City to avail of the CMP, a government program aimed at providing affordable housing to low-income families. With the aid of the Bacolod Housing Authority (BHA), RHAI secured a loan from the National Home Mortgage Finance Corporation (NHMFC) and acquired the land. As a condition of the CMP, members were required to sign the LPA and maintain good standing within the association, as stipulated in RHAI’s by-laws. However, some occupants, including the petitioners, refused to sign the LPA and failed to meet their obligations, leading to RHAI initiating eviction proceedings. The trial court ruled in favor of RHAI, ordering the petitioners to vacate the property, a decision affirmed by the Court of Appeals (CA).

The Supreme Court upheld the CA’s decision, emphasizing that due process was observed in the case. Petitioners were given ample opportunity to present their defense in court, including the right to counsel and cross-examination of witnesses. The fact that they chose not to present evidence to rebut the charges against them did not constitute a denial of due process. As the Court noted:

It is basic that, as long as a party is given the opportunity to defend his interest in due course, he would have no reason to complain, for it is this opportunity to be heard that makes upon the essence of due process. Where opportunity to be heard, either through oral argument or pleadings is accorded, there can be no denial of procedural due process.

Building on this principle, the Court addressed the petitioners’ claim that they were denied due process during their expulsion from RHAI. The Court found that RHAI followed its by-laws in expelling the petitioners, issuing notices and providing opportunities for them to comply with their obligations. The testimony of Mildred de la Peña, the President of RHAI, confirmed that the association adhered to its procedures for expulsion, which included sending notices to members to attend meetings and fulfill their obligations. De la Peña testified:

As per by-laws of the association we are sending notices for the members to come, to attend the meeting and inform them whether they have paid their obligation. Three (3) successive demand from the association and they will not still appear with the association, the association have the right to default them as per by-laws.

Despite these notices, the petitioners failed to comply, leading to their expulsion. The Court emphasized that the essence of due process is the opportunity to be heard, and RHAI had provided this opportunity to its members. It further stated:

We will inform that member that they are no longer with the association. The association will send them a notice that they are already expelled from the association.

The Court also addressed the petitioners’ argument that they were deprived of their right to own a piece of land under the government’s socialized housing program. The Court acknowledged that RHAI was formed to enable dwellers, including the petitioners, to purchase the lots they occupied under the CMP. However, the Court emphasized that to qualify as beneficiaries under the program, certain requirements and obligations must be met. The petitioners’ refusal to join RHAI and comply with their obligations compelled RHAI to expel them, thereby disqualifying them from the benefits of the CMP. The Court underscored that:

Petitioners were never prevented from becoming members of RHAI. In fact, they were strongly encouraged to join and comply with the requirements of the CMP, not only by the RHAI, but also by the BHA.

The testimony of Jeanette Deslate, the Regional Director of NHMFC, further supported this position, explaining the conditions under which beneficiaries could be substituted:

Substitution of beneficiaries can only be possible because of three reasons: One, is the default in paying the monthly amortization: one the waiver of the beneficiary because he lost interest in the lot anymore and the loan and the third, is non-compliance or disobedience of the rules and regulation of the association or the community.

The Court emphasized that the CMP is designed to benefit those who comply with the rules and regulations of the homeowners association, and the petitioners’ failure to do so justified their expulsion. The Court acknowledged that while the petitioners were actual occupants of the subject land, this did not grant them an unconditional right to ownership. The due process guarantee cannot be invoked when no vested right has been acquired. Acts of possessory character executed by virtue of license or tolerance of the owner, no matter how long, do not start the running of the period of acquisitive prescription. The Court concluded that the petitioners’ presence as non-paying occupants had caused RHAI to experience deficiencies in the payment of monthly amortizations, to the detriment of other compliant members.

FAQs

What was the key issue in this case?	The key issue was whether long-term occupants of land acquired under the Community Mortgage Program (CMP) could be evicted for failing to comply with the homeowner association’s requirements. This includes refusing to sign the Lease Purchase Agreement (LPA), failing to pay membership dues, and not attending meetings.
What is the Community Mortgage Program (CMP)?	The CMP is a government program aimed at providing affordable housing to low-income families by enabling them to purchase the land they occupy through a community association. It involves securing a loan from the National Home Mortgage Finance Corporation (NHMFC).
What are the requirements for beneficiaries under the CMP?	Beneficiaries must comply with the rules and regulations of the homeowners association, including signing the Lease Purchase Agreement (LPA), paying membership dues, and attending meetings. Compliance ensures they remain in good standing and eligible for the program’s benefits.
What happens if a member fails to comply with the association’s by-laws?	Failure to comply with the association’s by-laws can lead to expulsion from the association. It also means losing the right to continue occupying the land under the CMP.
Was due process observed in this case?	Yes, the Supreme Court affirmed that due process was observed. The petitioners were given ample opportunity to present their defense in court, including the right to counsel and cross-examination of witnesses.
What was the basis for the petitioners’ expulsion from RHAI?	The petitioners were expelled for non-compliance with RHAI’s by-laws. This included refusing to sign the LPA, failing to pay membership dues, and not attending meetings.
Can long-term occupancy grant ownership rights?	No, long-term occupancy based on tolerance or license from the owner does not automatically grant ownership rights. The period of occupancy, no matter how long, does not start the running of the period of acquisitive prescription.
What is the significance of signing the Lease Purchase Agreement (LPA)?	Signing the LPA is a crucial requirement for becoming a beneficiary under the CMP. Refusal to sign the LPA disqualifies individuals from availing the program’s benefits.
What recourse do homeowners have if they are facing expulsion?	Homeowners facing expulsion should ensure they are informed of the charges against them and given a fair opportunity to be heard. They should actively participate in meetings, comply with by-laws, and seek legal counsel if necessary.

In conclusion, the Supreme Court’s decision in Arroyo v. RHAI underscores the necessity of complying with homeowner association rules to maintain eligibility in socialized housing programs. This case serves as a reminder that while such programs aim to provide affordable housing, beneficiaries must fulfill their obligations to protect the integrity and sustainability of these initiatives. The ruling reinforces that procedural due process must be observed in the implementation and enforcement of community rules.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: JOHN C. ARROYO, ET AL. VS. ROSAL HOMEOWNERS ASSOCIATION, INC., G.R. No. 175155, October 22, 2012